Expert Speak India Matters
Published on Nov 28, 2019
Why Govt should increase funds for healthcare during economic slowdown

Rich countries belonging to the Organization of Economic Cooperation and Development (OECD) are today spending over 10 per cent of their GDP on healthcare. The US spends 16.9 per cent of its GDP on healthcare. India being nowhere near the per capita income of such a club of advanced countries is spending around 3.6 percent of the GDP and the public expenditure component is only 1.5 per cent.

India’s healthcare system both in urban and rural sector is in dire need of funds to employ more doctors and nurses and build more hospitals and better run primary health centres in rural sector.

Today, when the economy is growing at a low rate of 5 per cent, there is less hope of government garnering more revenue from business and public and the government spending on health will shrink further. It will affect the health of women, children, youth and the labour force of India and with poor health, there is no hope of India becoming a shining star of Asia.

The continuous intake of heavily polluted air in urban areas is already doing damage to our lungs and is reducing the longevity by at least 2.6 years. People who are poor have to queue up in public hospitals to seek medical attention. It is a nightmare for patients to keep waiting in the queue for hours. Private hospitals are often more accessible but are unaffordable for the common person.

According to the Centre for Disease, Dynamics, Economics and Policy, Washington, there is a shortage of 600,000 doctors and two million nurses in India. The number of doctors per 1000 population in India is lower than in advanced and other middle-income countries with one government doctor for every 10, 189 people. There is shortage of hospital beds also that leads to terrible congestion in public hospitals where one can see patients lying in the corridors for want of space.

This makes the out of pocket expenditure in healthcare in India, as one of the highest in the world. Sixty-five per cent of healthcare cost is being spent by patients themselves, pushing 58 million into poverty annually. This is because of the high cost of drugs. Patients have to shell out for all kinds of extra costs while they are being treated ‘free’ in public hospitals.

According to the latest National Health Accounts released in March 2019, patients bear a big chunk of health expenditure themselves, which is as high as 61 per cent of the total health expenditure.

Government’s health expenditure stood at 30.6 per cent of the total health expenditure. Patients end up spending out of pocket on medicines, bed charges, diagnostic tests, drugs and products like vitamin supplements.

While government expenditure was 1.18 per cent of the total GDP in FY 2016, Out of Pocket Expenditure was 2.33 per cent of the GDP that year according to NHA estimates.

Of the total healthcare expenditure, the amount spent to buy medicines at pharmacies was 27.9 per cent. Expenses incurred at private general hospitals was at 25.9 per cent of the total expenditure as compared to treatment in general hospitals where it was lower at 13 per cent.

With such a meagre spending on healthcare, how does the government hope for a rise in labour productivity? The health of the labour force is important and is directly related to its productivity. Take the case of German workers whose productivity  is higher than most countries because of their robust health which is due to a good healthcare system.

With emphasis on ‘Make in India’ and trying to woo foreign investors, the quality of the labour force becomes very important. Absenteeism due to illness is not only bad for production but also means loss of wages for labourers.   With the job market shrinking, people will have less resources to spend on healthcare. It is such times of low economic activity that the government should spend more on healthcare.

Women and children, the elderly and disabled, need special attention during these hard times. Though there has been quite a lot of progress in reducing the child mortality rate and maternal mortality rate, much more is needed, especially in remote and hilly areas, to bring these rates down further.

Malnourishment among children and women is also common. It is poor health of women which leads to children having low weight at birth and become stunted later. Women’s diseases have to be controlled by giving them access to healthcare especially when they will be inclined to ignore them due to reduced incomes.

There is an increase in the incidence of breast cancer among women and also port partum mental depression. Awareness of these diseases is important for their health. While mental illness in general is on the rise and according to WHO 7.5 per cent of Indian population suffers from mental disorder, the National Mental Health Programme allocation has been reduced from Rs 50 crore to Rs 40 crore in Budget 2019-20. By 2020, 20 per cent of India will suffer from mental illness. And we have less than 4000 mental health professionals.

Children’s health is of utmost importance and immunisation against common diseases protects them. According to the WHO, 7.4 million children are not immunised and they are mostly girls. The youth need to be looked after because unemployed youth get addicted to drugs easily for want of any occupation. There will have to be more de addiction centres in affected States.

The health profile of States is quite alarming. Poorer States continue to have large incidences of communicable diseases. The number of non-communicable diseases is rising in richer States like Punjab in which cardiovascular diseases to which Indians are prone to are on the rise. It is due to urban stress, addictions like smoking, alcohol or drugs, genetic makeup, lack of exercise and improper diet. All these health issues need to be controlled before they reach unmanageable proportions.

In 2018 Chronic Obstructive Pulmonary Disease was the leading cause of death after heart disease. Preventive care and regular checkups are very important yet the allocation for prevention of cancer, diabetes, cardiovascular diseases and stroke but the allocation to it was reduced from Rs. 295 crore to Rs.175 crore in the last Budget.

The dismal state of the rural health sector has already been revealed in the Economic Survey 2018-19. About 60 per cent of the Primary Health Centres have only one doctor while 5 per cent have none. Only 20 per cent fulfil Indian Public Health standard norm. There is an acute shortage of human resources in peripheral health institutions. Tertiary healthcare under the National Urban Health Mission also saw a big dip of Rs. 200 crore in allocation in Budget 2019-20 while the allocation for upgradation of 75 district hospitals to medical colleges has gone up to Rs. 800 crore.

All aspects of healthcare are important, especially in times of an economic downturn. There should be an increased allocation for healthcare and grounds should be prepared for universal healthcare which will treat each and every individual free of cost. Ayushman Bharat covers 500 million people and still does not amount to universal healthcare. It is not an insurmountable task to have universal healthcare because cutting expenditure in other areas like defence can make funds available for healthcare which is of much more immediate importance.

The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.


David Rusnok

David Rusnok

David Rusnok Researcher Strengthening National Climate Policy Implementation (SNAPFI) project DIW Germany

Read More +